Vernon Menard has helped a lot of companies launching products abroad avoid spectacular bungles. He remembers the American pharmaceutical company selling its drugs around the world that wanted to give its weight-loss pill a name that sounded like "t'es gros," which means "you're fat" when pronounced by French speakers. Then there was the American desserts manufacturer that almost pulled the trigger to print thousands of ads containing a sexual reference. "I see companies making potential brand-damaging or brand-destroying mistakes on a daily basis," says Menard, co-owner and chief operating officer of 16-person Charlotte (N.C.)-based translation and consulting firm Choice Translating, which earned $1.5 million in sales in 2006, primarily through localizing companies' product names and taglines.
Menard has watched the number of small U.S. companies expanding overseas increase during his 13 years in the business, and says it's not uncommon for companies he works with to export to as many as 20 different countries. According to the U.S. Commercial Service Export Assistance Center, 293,000 U.S. businesses exported goods and services in 2006, a 6% increase over 2005. About 90% percent of those firms, which exported a record $375 billion last year, were defined as small businesses by the Small Business Administration.
Big Risks for Small Companies
For any company, exporting is a risk, requiring significant planning and research before introducing a product in a different culture. But that's especially true for small companies, says Ernest Scalberg, dean of the Fisher College of Business at the Monterey Institute of International Studies. "Big guys have wised up to most mistakes; or they can go in and fix it, because they have the money to do it. Make a mistake as a [small company] and it can be fatal," he says.
Scalberg advises companies to make sure products are suitable for the new market, in terms of taste, before thinking about planning a product launch. This means a significant investment of time and resources devoted to due diligence, and the discipline to look elsewhere if an opportunity looks like a possible disappointment, says Scalberg.
Ideally, that due diligence should include spending some time in the new environment. Scalberg recommends executives get versed in the culture, but don't assume that they know everything about it just because they've spent a bit of time there. "Most big failures are not the result of miscues in social courtesies, but the underlying misunderstandings: not understanding concepts of time; how long does it take to get decisions made; who are the real power brokers," says Les Dutka, chief executive officer of Echo International, a Pittsburgh-based consulting firm that provides cultural training to executives expanding into global operations.
Business owners might be tempted to turn over translation of the product's name, tagline, and Web site to a free service on the Internet, or to someone in the office who studied the language in school for a few years. But Menard says hiring trained linguistic professionals is the most important—and most underappreciated, for the amount of time and resources it requires—priority for a company to safely avoid a language-related mistake. "Companies forget that translating requires at least as much review and editing as the original document did.," he says. "If anything, it's more complex."
Form Relationships with Locals
In localizing a product, due diligence also applies to relationships. Often, U.S. businesspeople think success is about quality and price, but in "relationship cultures, it's who you know that gets you the sale," says David Eaton, founder and president of Aperian Global, a Boston-based firm that specializes in helping cross-cultural teams work more effectively.
That means it's important to establish traction with the right people in a society. To do that, Eaton suggests hiring consultants on the ground to do market research and to form relationships with suppliers, workers, and potential customers (see BusinessWeek.com, 10/11/06, "Finding a Reputable Overseas Rep"). As a final step before launching the product, Eaton advises his clients to consider contracting with a local advertising company to make sure packaging and placement are in line with local customs.
Taking the time to perform these steps could ensure a successful product launch from day one. Says Menard: "The cost of reducing risk by handling globalization issues up front and professionally is always lower than the cost of a damaged brand."